Sirius and XM: Let 'em Merge.

Posted by: David Kiley on February 27, 2007

I was reading one of the hysterical opinion pieces that have come out against the proposed merger of Sirius Radio and XM radio. The latest was from Automotive News, which used the M word to try and derail the deal…monopoly.

I’m with the companies on this one. Sirius-XM satellite radio wouldn’t be a monopoly. It’s not like AT&T before the breakup. I am a Sirius subscriber. I listen to Sirius and terrestrial radio in my car, as well as my iPod, CDs and books on tape.

When Sirius and XM spent loads of money for Howard Stern, Major League Baseball, the NBA, Martha Stewart, Oprah Winfrey, etc., I knew the numbers didn’t add up. But those ridiculous, unsustainable prices resulted from the competition between the two services. Neither company has a hope in hell of making any profit. And research shows that subscribers are only willing to pay about $12-18 per month for it.

The anti-merger set thinks the merger will result in price fixing. I don’t know anyone who absolutely can’t live without the audio version of Martha Stewart’s daily TV show….oooh boy…the audio of Bobby Flay cooking peppers. Or the audio version of Bill O’Reilly.

If Sirius-XM starts jacking up the price beyond people’s mental threshold, they will just leave. This is not live or die programming. It’s nice to have. But it’s not crucial.

Don Imus recently challenged my assertion that the Justice Dept. would not block it, reminding me that Justice blocked the merger of satellite TV services a few years ago. Different story. For one thing, there are some people in rural areas who depend on satellite for TV. No SAT…no TV. The same situation does not exist for radio. Though I’m sure that some of the rural dwellers who have bought in to sat radio think it’s much better than the commercial terrestrial signals they could drag in.

I’ll be shocked if Justice blocks sat radio in the end.

How long can the two services go on losing money anyway? One will be forced out of business in any case, and then we will have one service in any case.

 

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News, opinions, inflammatory meanderings and occasional ravings about the world of advertising, marketing and media. By marketing editor Burt Helm, Innovation Editor Helen Walters, and senior correspondent Michael Arndt.

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